NFT stands for a non-fungible token, which means that hidden in those quirky artworks, there is a totally unique and non-interchangeable unit of data stored on a digital ledger that uses blockchain technology to establish proof of ownership. NFTs are collectable digital assets that hold value, just like how physical art holds value, so do NFTs.
NFTs are a lot like cryptocurrencies such as Bitcoin and Ethereum. However, an NFT is completely unique, and it can't be exchanged like-for-like, which is where non-fungible starts to make sense. The file stores extra information that elevates it above pure currency and brings it into the realm of, well, anything, really.
Any kind of easily reproduced digital file can be stored as an NFT to identify the original copy, like photography, art, music, videos, tweets, and even memes. You can make NFTs from almost anything unique that can be stored digitally and holds value. They're like any other collector's item, like a painting or a vintage action figure, but instead of buying a physical item, you're instead paying for a file and proof that you own the original copy.
How do NFTs work?
NFTs are part of the Ethereum blockchain.
The unique identity and ownership of an NFT is verifiable via the blockchain ledger. they were first launched on the Ethereum blockchain, but other blockchains including FLOW and Bitcoin Cash now also support them. Whether the original file is a JPG, MP3, GIF or anything else, the NFT that identifies its ownership can be bought and sold just like any other type of art – and, like with physical art, the price is largely set by market demand.
If you wandered into a gift shop of an art gallery, you'd find a number of replicated prints of famous masterpieces, well there are some NFTs that act the same way. There are parts of the blockchain that are totally valid, but they wouldn't hold the same value as the original.
NFTs will most likely come with a license to the digital asset it points to, but this doesn't automatically confer copyright ownership. The copyright owner may reproduce work and the NFT owner gains no royalties.
Where can I buy NFTs?
Don't go thinking you've hacked the system by right-clicking and saving the image of an NFT. That won't make you a millionaire because your downloaded file won't hold the information that makes it part of the blockchain and identifies the file as the original.
If you do want to look into buying NFTs, they can be bought on a variety of platforms depending on what you want to buy (for example, if you want to buy baseball cards you're best heading to a site like digitaltradingcards, while other marketplaces sell more general pieces). You'll need a wallet specific to the platform you're buying on and you'll need to fill that wallet with cryptocurrency. As the record sale of Beeple's Everydays – The first 5,000 days at Christie's (pictured above) proved, NFTs are hitting more mainstream auction houses, too, so these also are worth watching out for. In case you missed it, that Beeple piece went for $69.3 million.